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c Jr PERSONAL ON I 1 1 Qct ii L I L I I L 1 I i 4 B41 74IN VBFT F 7 2 M5 Ls s I P FEDERA REIERVE BANK January J dear Governor Seay an sending you uneler aeparate cover a set of circular letters and forms issued by the old Fund Connittee adviairc contributors in repu 1 to the dtstribution of the Fund which aro self exT4anatory A largo nunber of the contributors have taken advantage of the Second maiti as set forth in the otrlittet s circular of Jr y desiring a check of the Federal eserve Bank of New York in lieu of the actual gold are therefore issuing our cashiers checks to contributors desiring our checks and receiving a draft on the Asaistant Treasurer of the United States in New York to offset the mount of Checks so issued It was originally intended to request member banks to deposit with the Pederal Reserve Bank in their district the check issued to them but as the majorlLy seem to desire to have checks issued to their New York Correspondents fOr accountn instead it will be irTossible for us to determine the amount of the chocks v4hich will be deoositol witlrthe various Federal Reoerve Banks raspoctfully George J Softy nag Governor Federal Reserve Ban Riehmond Va IAN FEDERAL RESERVE BANK Jan 29th y dear Governor Seay It ia disappointing to learn tht you will not be able to attend the meeting inshington on the 4th and you will also understand I judge that on that account I am unable to accept your kind invitation e lOrrluncheon that day Later on I hope to have the pleasure of seeing you in Richmond but for this week and some weeks to come I am going to be pretty hard pressed for time With many thanks for wishir4 to have mo with you and meet your Richmond friends I am Very truly yours Governor George Governor Poderal Ileserve Ba71k Richmond Va BSJr VG24 7 r2r7 7 FEDERAL RESERVE BANK OF RICHMOND FIVED FFR February 1 19 i LtERAL RESERVEBANK OF NEW YORK Benjamin Strong Jr Esq Governor Federal Reserve Bank of New York F 40 sTR Oblal PS 39010 t New York N Y Dear Governor Strong Please accep 30th and for the circula of the GOld Tund 4 our thanks for your letter of the matter relating to the distribution e 0 a e leadeeyei 7yeepy e414 at 00 1 ed 41 a Cd 47 4elerywa 0 r7 2a r4 c C iod OP 1 a i 9 is z Lrl 4 a i 4 i e Zi YllorfiZi AvAe ei Y w do GEORGE SEAY NweRICHNIOND VIRGINIA 7e1 C V 7Ze 6 e fL er ZG Z Ptt f b Z Ziet Z2 CG L e A eac v Ge 7e c 7i Z gz 9 c 1P2 d EORGE U SEAY ticHm0No VI RG IN IA et A e 1 6R GL IZ 7A6ce e e A c 1 V 5EORGE J SEAY IR IC H MONO VI RG IN IA A G Z 77 6 rer BE IT RESOLVED let That the Directors of this Bank have received with profound regret and dissent the reply of the Federal Reserve Board to the resolutions of this Board passed at a meeting held on the 4th day of March 1915v relating to the salary of the Governor of this Bank 2nd That the Directors of this Bank are and will be held to be responsible for its management that by reason of residence away from the seat of management on the part of those not officially connected with the Bank they are compelled to act through a chosen representative to a greater degree than the Directors of ordinary of this Bank is its Executive head appointed by the Directors to represent them in the administration of that the Governor banks its affairs and is responsible to them for its efficient management and in all dealings with its stock holders the member banks by which the majority of this Board are elected 3rd That in selecting a Governor the Directors of this Bank were actuated by a high sense of their responsibility that they are and should be free to determine for themselves the person the ability experience and qualifications desirable and necessary for the responsible position and are and should be free to control within reasonable limits the compensation which should be paid and may be necessary to be paid to their representative realizing that it is but a narrow step be ween the control of the Governorship and the control of compensation for that office and moreover acutely conscious that the compensation carries with it the power to the right or power to fix defeat any appointment to said office 4th TAWG in overruling the deliberate judgemant and unanimouae action of this Board taken in the best interests of the Bank and in arbitrarily fixing the salary of the Governor after his election by this Board and the determination of a proper and reasonable compensation which judgment is sustained by a comparison with salaries paid in other 0 Federal Reserve Banks the Federal Reserve Board has abridged the autonomous management of this Bank in a manner which is not in our opinion warranted except upon misuse of the powers of Directors or a gross error of judgment and that in taking such action involving the personal responsibility and the integrity of the judgment of the Directors in a matter peculiarly within their province the Federal Reserve Board has assumed a control over the authority of Directors which cannot in the future fail to prove dangerous to the exercise of independent judgment Such action is viewed by us with grave anxiety and will in our opinion tend to create uneasiness and alarm among the member banks already jealous of nomy and of their part in the conduct of the thil tUto Federal Reserve System through Directors elected by them tp represent themselves and their business interests 5th That the Directors of this Bank desire to place on record their belief that the success of the Federal System of banking as at present constituted and governed lies in giving the fullest measure of utonomy possible to Federal Reserve Banks i4 in order to develop that close Sympathy and feeling of local interest and understanding between the management and Directors and the member banks in the several districts which would otherwise be impossible in this great country with its complex relations and which in our judgment is lishment of confidence absolutely essention to the estab and good will and is particularly essential in this connection in order to bring State banks into the System 6th That the present action of this Board is based upon a deep conviction of its duties and responsibilities As just and independent powers and is not determined by its relations to 4 the present Governor of this Bank who in our opinion however combines a knowledge of the science of banking a familiarity with the details of its practice and of account ing with a sound judgment of the correct principles of credit in a higher degree even that this Board believed he possessed at the time his salary 4 was fixed by this Board 7th Thta it is the desire and purpose of this Board to co operate with the gederel Recerve Board with mutual understnading having only in mind the development of the Federal Reserve System possibilities of good and to that end its to its best efforts will highest be always directed 8th That the Directors of this Bank regard it their sacred duty to point with deep concern to the actio of the Federal Reserve Board in the following particulars The repudiation of the judgment and unanimous action of the Directors of this Bank fixing the salary of the Governor The announcement see First Annual Report of the Federal Reserve Board page 190 that this Bank had fixed the said salary at whn in fact no such action was taken by this Bank or its Board of Directors The arbitrary fixing of said salary by the Federal Reserve Board thus usurping in our opinion one of the prerogatives Bank s Directors see paragraph 44 of section 4 of this of the Federal Reserve Act That against writing is filed as a and on account of the foregoing this paper respectful but solemn that the same be made a part of the minutes copy be transmitted to the Federal protest and it is directed of this meeting and that a Reserve Board Signed John F B ruton Edwin Mann R Coker James F Oyster Waldo Newcomer 4 By wire Your Special Committee to whom was assigned the duty of preparing resolutions relative to the actions of this and of the Federal Reserve Board bearing upon the Governor s salary beg to submit the following pre amble and resolutions the adoption of which we respectfully recommend WHEREAS the Board of Directors of this Bank did on the day of November 1914 fix the salary of the Governor of the Bank at Fifteen Thousand Dollars from the date of his election to wit October same to be payable monthly and whereas upon report of this action to the Federal Reserve Board same was not at once acted upon but through a semi private letter of one of the Federal Reserve Board the sum of ten to twelve thousand dollars was suggested and whereas at the succeeding meet ing of this Board resolutions in support of our action were adoreted and forwarded to the Federal Reserve Board for consideration and to which and Whereas later a Special Committee by our reference is here made inetructions visited Washington and laid the matter before Ur Harding of the Federal Reserve Board report of this conference having been made to this Board and whereas following a full and fro discussion it was mania this Bank would be pro mously agreed by this Board that the interests of moted by paying the Governor the salary first named Thousand Dollars tip4vit Fifteen and that it would be proper to respectfully urge Federal Reserve Board to reconsider its the action disapproving the amount of salary fixed by this Board as aforesaid and that resolutions be submitted setting forth some four well considered reasons NOW THEREFORE RE IT RESOLVED 1 That in justification of our action we respectfully emphasis the reasons heretofore assigned and hereinbefore referred to copy of which here follows to wit COPY OF RESOLUTIONS ADOPTED NOVELBER NO 1910 THEREFORE BE IT RESOLVED that the Board in support of its action of last meeting in fixing the salary of the Governor at the sum of fifteen thousand dollars per annum to begin from the date of his election October same to be payable monthly That this salary mover as well th8 services to be rendered by Mr Seay the Governor as a member of the Federal Advisory Counsel Respectfully submit the following as some of support of the foregoing the reasons in and the same are submitted to the Federal Reserve Board through the Federal Reserve Agent as follows A majority of the Board of Directors are direot re presentatives of the steekholders of this Dank and as an excess expense ratio will primarily affect the interests of coin electors the member banks to whom we regard ourselves as personally accountable we have given the matter of the salary of the Uovernor our most careful consideration The incumbent of this office Ur George J Seay is in our opinion by equipment and experience eminently qualified to fill a position supported by a salary of this amount e are informed by outside indisputable authority that he has within the last twelve months declined a position of very high trust at a salary of twelve thousand per annum We have advised with responsible representatives of some of the largest member banks in the District and they have counselled us to fix the salary at not lees than fifteen thousand dollars kr Seay s usefulness to this Bank as Governor will be crippled and the Bank s position in the District suffer should the salary be fixed at a less amount for that the highest salary paid by any bank in the City of Richmond is larger and one of the next highest is lose than the salary named by a like sum 6 A large majority of the banks in the territory composing this District are State banks and the prospects of securing them as members will be improved by the rank immidiately accorded the Federal Reserve Bank of Richmond aid by the remarkable tact1 ability and especially by the clearness of thought and expression possessed by Ur Sooty all of which can be be assured by the payment to him of a proper compensation vihich we find to be not less than fifteen thousand dollars And we burden him further without extra pay with the responsible duties of representing this Bank as a member of the Federal Advisory Counsel 7 By virtue of conditions confronting the Board it is practift cally impossible for its members to give the bank daily or even weekly personal attention and se long as the responsibilities incident to its management remain none the less their own the membensof the Board are not content to place a smaller estimate than the amount named on the services to be expect ed rem the Xxecutive of the Bank 3 AS FURTHER RAt3OSV RSDPECTFULLY S JBMITI That in many of the district the salary of the Governor is twice ects the amount of the salary of the Federal Reserve Agent and that in rev one to wit nviistritt District 10 is the salary of the Governor fixed the sumo as that of the Federal Reserve Agent and it is respectfully suggested that this having been done by the Board of Directors of that District there were undoubtedly well considered local reasons for sueh action And further that no schedule or p len has been followed in fixing the salaries of the Governors or other officials and the judgment of the directors guided by circumstances and the fitness of That the action of the the an for the position has Federal Reserve Board in prevailed disapproving the amount of salary fixed by us for the Governor unconsciously or othervi se disoriminated against this District or will be so construed for that the aggregate amount of the salaries of the other Governors is 60 larger than the aggregate amount of the salaries of the other Federal Reserve that the chief reason given by the Board for its action to wit the desire Agents and 4 not to burden the bank with expense has proven by the operation of the bank to be less applicable to this district than to any other That the responsibilities of the Adminietrntive head of this Dank are as large comparatively if not larger and probably more complex than any other District in the system That the work of the Executive or Administrative department of this Bonk is in advance of any other District tag the fact in the system and thip that the duties of the Cashier have thus notwithstand far boon discharged in part by the Governor effecting a saving to the Bank to date of from sixteen hundred to two thousand dollars That after full revieW in the light of all knowledge and developments we are firmly convinced that the action of this Board was just and well founded WHEREFORE WE R FULL ask that the Federal Reserve Board re consider its action and conftra the judgment of 4111 44aiitvievel e4 4h Aa414n of I this Board in fixing the Governor s salary at Fifteen Thousand Dollars 4 5 PERSONAL Febr zzy 24th 1915 Dear Mr oeay I have been trying every minute since receiving yours of the 9th inst to write You a longhand lotter but it has literally been impossible on account of engagements at home my absence from the city and the tremendous amount of work at the office I am moot Incious to have a serious talk with you along the lines of your letter and as we are to have a meeting of the Clearance Committee at an early date X take this opportuniLy to drop you a line to sugt vst that we got off in a corner adri talk it over then Is this soon enowth to meet your own views Please accept apologies for my delay in writing you which absolutely unavoidable also my very warmest regards Very truly yours George J Governor P ral Resorve Bank Richmond Va 3S Jr was FEDERAL RESERVE BANK OF RICHMOND VC r FILING DEPT APR mar FEDER it RESERVE BANK My dear Governor Strong By the time this reaches New York you probably will have returned from your short vacation which I hope you greatly enjoyed The enclosed will explain itself I am very much in 4erested to know your comments upon the suggestion of the Board With kindest regard I am Very truly yours Benjamin Strong Jr Esq Federal Reserve Bank New York N Y Enc 4 N 4 IN G DETT w 1315 LdERAL RESERVE BANK April S Dear Sir 1a Strong returned to the office on Mon day and since that time has been 30 busily engaged that he has found it impossible to reply to the tuo letters received from you in his absence He has asked ma to write and apologize for the delay and advise that you may mcpect to hear from him in a day or two Very truly yours Secretary to Mr Strong George J eay Esq Governor 7edoral Reserve Bank rtiohmou4 Vett April PFRSOAAL Thar Mr Seay This to ry first opportunity to reply to your letter of the 6th and to return tho enclo mres vith whInch I now do having read them rtreat intorsat and very syGrathetically On some of these matters 18 you particularly tUlly realize I have relied a great deal upon Mk Curtis juagment and exnerience and if you felt warranted in 5 uthorising mo to I would be glad to do so talk this over with him then diecuas it with you very frankly at our next moetina which likely will occur in Washington on sous clearance matters before very long fact Of course I 3M conscious of the that it is none of my business officially but I am nevertheless very much interested as your It 113 5 tion along these linos in Washington be Iring on our last conversar and having that also in mind I would like to talk it wrer with you when next we r re in Vashington If you feel justified to permit Irv to talk this over with Mk Curtis I will do so right away in which mIse might be deairable for you to return the enclosures Very truly yours Governor 4 George J Seay Esq Governor Federal Reserve Bank of Richmol7d Richmond Virginia BS Jr 010 ales 2 3EORGE J SAY RICHMOND VIRGIN IA b7 1 Z e VE7 7 o 7 zu 17C c c puA en ece e f 4 wz el 40 G 7 GL Jjj GEORGE J SEAY RICHMOND VIRGIN IA December 23rd Benj Strong Jr Esq Federal Reserve Bank New York City Dear Mr Strong This is to give you my very best wishes for a happy Christmas and a most prosperous New Year and I wish to take the occasion to express the very great pleasure derived frem our personal intercourse during the past year and the hope that the have grown friendships which up among us will be strengthened in the coming year With my warmest regards Sincerely yours c GEORGE I SEAY RICHMOND VIRGIN IA Z uf 7 24A tf FEDERAL RESERVE BANK OF RICHMOND FIFTH DISTRICT DI RECTORS OFFICERS JAMES A MONCURE CALDWELL HARDY GEORGE U SEAY GOVERNOR CHAS A PEPLENICE GOVERNOR GEORGE H KEESEE cAsHIER DEPUTY FEDERAL RESERVE AGENT CHAIRMAN AND FEDERAL RESERVE AGENT H El WILCOX BP LTIMORE Ho EDWIN MANN eLucFIELo w VA JAS F OYSTER wAsHINGTON o C JOHN F BRUTON wiLSON N c EDMUND STRUDWICK RiCHmONo H GOUVERNEUR WILMINGTON D R COKER HARTSVILLE s c October 27th 1916 Benjamine Strong Jr Esq The Lewiston Estes Park Colorado My dear Strong I have thought of you many many times and hearing that you like to receive letters from the seat of war I have determined to send you this so that I may hear from you directly as to how a war horse feels when he is far from the battle I know that you have an inordinate alAetite for work and I am enter taining the conviction that you are making the most of your furlow to batch out trouble for the Federal Reserve System We all missed you tremendously at our last gathering in Boston and tried to make it plain to you as far as a personal telegram would do it I am sure that it would have warmed your heart to hear expressionsof affection and admiration from everybody there I came down from Boston with Kains and we spent half a day together in New fork He is a bu2ly good fellow as you know and becomes more and more attractive as you know him better tell of his visit to South America He had many entertaining things to Having traveled more or less over the world he has acquaintances and friends in most every port and I undei stand that it wastecause of some wonder and amusement particularly to Mr Untermyer to find that Kains knew somebody either from back home or else where at most every important place visited Untermyer thought that he was Benjamine Strong Jr Esq October 27th bluffing until it proved otherwise Aiken presided over us in from talking too much Boston and was much occupied in keeping us all Mr Delano and Mr Harding who as you know were with us fitted into the scheme of things admirably and were quite outspoken in meeting But for the fact that I know y0 u like to be where the trouble is thickest I should say that you were lucky to be away at the time of the new collection system of us and launching It interfered with the holiday plans of most all have not been able to get more than a two weeks period even yet Aiken I think had to postpone his expedition after Block Island tuna and Maine trout I believe you have some trout fishing in your vicinity If so I envy you since that is my most beloved Pastime Well we launched the collection system along the lines previously agreed upon which caused us all so much travail There are kickers aplenty of course but most of the banks particularly the larger ones are praising the system and the public is certainly keenly interested in the results One of the effects of the operation of the system is encroachment upon reserves plan Of course there is no real reason why this should be so since the is upon the deferred credit basis but some of the banks have neverthe7 less made it a pretext for encroaching upon reserves We have been imposing the penalty since the first of August and the charge for that offense during the month of August amounted to about 4 000a00 I communicated all this to the Board all of whom were keenly interestod and seamed to entirely approve the position taken by this Bank As a result of the imposition of the penalty or as the result of the combination of other causes our reserve balances have increased about 3 Benjamine Strong Jr Esq October 27th 1916 The amount of reserve required to be kept with us on June 30th Which is the last Comptroller s report was reserve balances are collection system will per cent of the convince collection to To day our This of course does not include any deferred credits which frequently amount If anybody was in doubt as Ito as much as there being such them We are not anuanimile as float this doing more than twenty business of the district according to my estimate although up to this time this Bank has been doing more than any of the other Federal Reserve Banks excepting of course the big banks of New York Boston Philadelphia and Chicago At this time of the year New York is in debt to us at every weekly settle ment period but that state of affairs will change later on For the period September let to Octobor 11th we paid New York t through the gold fund For a few weeks back New York has been paying us at the rate of about t a week I am very deeply interested in the matter of making checks of member banks on Federal Reserve Banks pass at par for immediate availability at all Federal Reserve Banks settlement to be made through the gold fund daily of course This matter was discussed in Boston and while there were some objections to and disbelievers in the plan the majority sentiment was favor able to it and the two members of the Federal Reserve Board stated that the Board believed it to be desirable if it could be effected with entire safety which I am sure can be done This will operate in favor of the New York Reserve Bank although of course it will tend to operate against member banks at least in the Central Reserve Cities since it will if put into effect substitute Federal Reserve October 27th Benjamine Strong Jr Esq 40 exchange to a very large degree for New York exchange It will also result in retaining the balances of member banks within the district to which they belong to a very much larger extent than heretofore and will so increase the financial independence so to speak of the several districts which of course is one of the chief purposes of the Federal Reserve Act however it may be brought about You see I am discussing the matter rather freely and you will understand I am sure that all of this is intended to be gossipy rather than argumentative Mr Jefferson is down with us to remain several days to discuss with our Vice Governor and Auditor various methods of accounting etc and to exchange ideas and information Perhaps you We are all very glad indeed to have him mayhave heard that we have bought a site for a bank building and now have before us the interesting but vexatious problem of constructing a building adequate for present and future needs of the Bank as far as we can look into the coming years Mat the public or treasury functions we may have to perform will be is to some extent of course conjectural It is probable that we shall have to call upon the imagination to an extent to provide for the developOur building lot is 95 by 120 feet and it is our ment of the system purpose to erect a building On yesterday I of classic outlines comprising four floors received a letter from Mr Hendricks saying that he had spent a week with you and that you were looking fine and working hard These are wonderful times through which we are passing and grAing more wonderful daily Gold is still flooding us as you know and prices are climbing and still climbing likewise the wage of labor also adding to the complexity of things It seems Politics is that we are in reality October 27th Benjamine Strong Jr Esq becoming the world s banker at least for a time The extraordinary prices which the other nations are having to pay for the things they obtain from us is transferring their wealth to us to an undreamed of Our discounted bills are South may possibly bring a oil Tobacco is bringing The cotton crop of the fast being paid off seed and billion and a half dollars including twice as much as posits of some of our little country banks at this time degree it are The de brought last year twice what they were last year and the South will be overflooded with a greater flood of money than it has every known in all of its experience that our bills are being paid off offered to us more freely There is no wonder then have bankers We shall probably The nev French acceptances industrial loan is a highly interest ing transaction and the banks seem disposed to participate to look to business of this character very largely in in it We shall have order to obtain revenue Pocsibly you read that interesting review of the Federal Reserve System by Professor Sprague of the paid in capital He advocates the return to member banks of one half I am very glad he took that stand and I believe it will become a serious question with us to make expenses return on our present capital and pay an interest I should not venture to send you such a long letter under other circumstances but 1 am making it proportionate to the distance between us for myself and I know for all of us fellows we are looking forward to having you back before very long Speaking With very warm regard I am Sincerely yours november 1st 1916 My dear Seay ust reached me Your fine letter of October 27th ha and has been very much enjoyed and prticularly how things are The report of the I et all am glad t the news going pi RicluAo u 7 Boston onference dimkp inted me a t e program as unfinished bit because so many items were 1 business The brushing up 7llection plan require more rough edges in the 4 d i gathered that many of tn than almost s ussion seemed to be impossible e question of giving immeuiate the topics on the pr of solution One of credit to chec Ilrnwn Qn er 1 renerve banks As you know I havo n1wj diested no opposed this after our early experiences which in hat it c1ud not be done but ake one stop at a time well to go s sitate daily that it Iles just as settlements which would and Due From reserve banks reduce It would neces the items Due To On the other hand it would nec essitate the adoption of very effective safeguards against kiting and against the development of the float just how the operation would work I gathered that the cuncen sus of views of those at the meeting was my own in one matter Mr 4 arding It is hard to see rather different from and others expressed the r 2 p To George J Seaj Esq Nov banks would view that chocks on Federal reserve be drawn inva riably against balances in excess of the minimum reserves and consequehtly the practice of drawing these transfer cheek would not only create no float but would lead to member banks carrying increased balances with the reaerve banks This is I thin xperience indicates that member banks ill draw jut a ma checks for transfer purposes as they can and send tTlem oa rig just as far abroad as possible covering h nearly or t day they particularly herd for me to swallow t are presented as can be 6r tie rate 14 tink they are entitled Furthermore I am i to do so if vie give immediate cre t for member banks is no serve bank i consequen own the me b The reeerve ceiculetion y the books of the re r bankeaccically 11 entitled seynif checks en rue to re hr e banks for deposit are not to count as t my r4r then why per contra should my to reserve bnle n ee be ch r ed with checks which I have drawn on that accoun d which hive rot yet been presented We must be consistent k to one of two theories namely that the reserves of member banks ire calculated on the books of the member banks as the place for calculation our books or on We have adopted our cwn books If therefore we permit this transfer business to Jevelop we will be abandoning much that we have gained in putting reserves on a good sound footing This is about the way 1 view the discussion at Boston with which you To George J Seay Esq Nov I an glad you wrote me frankly about do not seem to agree this view nor need you have any fear that my aectional feeling will influence me in my Vi3 7 s Making chacke on reserve banks par exchange in any pert of th Federal country will draw a good deal of money awae from New York I have always felt and still feel that that kind of money h Id by the eew been a merinos to their securit and largely the csuse of their unpopulerity both throuhou the country York bank r and politically They will do b of balances from interior baka without ii 1e h In place w York banks are going 0 6 and they are going to be just ae big and strong land porous al ever I congratula the easeful collection of penalties I doubt i4 it woul ork in our district however to have huge balances from but it is a matter under c nsideration Nee Wh2A is a husky in my mind It ave asked Mr Hendricks toAeke up ay able 4 imal d now employed by with the B a d the m in reporting e float is always Int thar accountants of float which is not correct week we should be able to tell exactly how much of our assets are invested in uncollected checks which exhibit this correctly The Board makes no figures Congratulations upon your new departure I hope your uuilding will be a great success and only wish we could do as well It will be impossible for um to considera building of To George J Seay Esq Nov our own probably for some years on account of the rapid development of business and the enlergement of our force Then again if Congress should upset out collection program our force might shrink RE rapidly as it has grown I thought Professor Sptague e article rather good and would agree with hie view ebout the return o one of the paid in capital were we now earning a larger margi over expenses In other words if we could look eith pertei oon the regular accumulstion of eurplus There ie little news to taken a furnished houee for t doing a little work and a good of myeelf dnte I have Denver verore I am loefing The doctor tolls me that I an ge a o in t shape and I judge he in right as I have gaited about f fteen pounds Once more any thanks r your letter and for the 11 nice things yext 611 every good wish and warnest regards I am incerely yours George J Seay Esq Governor Federal Reserve Bank Richmond Va BS VCM DERAL RESERVE BANK OF NEW YORK November e ae aaaereesq Governor Federal Reserve Bank of aichmoade Richmond Vat Dees Mr Seay We have not replied to yoar letter of the 20th regarding allotment of in vestments because we hoped to be able to present figures that woulu be satisfactory ee have been devoting every spare minute to a study of the pro to all concerned blem and have prepared some figures based upon expenses since organization etc These do not seem to throwliny light upon the subject but since you requested them and we have prepared them we enclose a copy herseith We worked along several other lines satisfactory resalts whioh did not One method which we submit seem to give any more herewith is simple and ap F parently to us would be a satisfactory basis at the present time operation this does not give the best results we If however in llignt take it up ween we have more time and work out a plan perhaps more correct in some details We believe that the investnents available for allotment should be distributed on the basis of present operations as taut is the situation We are compelled to face and that the basic prieciple of apportionment should be to enable the backs to earn expenses current dividends and accumulated dividends in so far as that may be possible Acting on this belief we have the following simple plan to offer 1 Let eacte bank whether or not it participates in the distribution of inveetmouts send to a representative of the investment Committee copies of its monthly reports to the Federaleaeserve in order to Board of earnings and expenses forme 266b and 287b begin the work of distributiun let them send copies of their reports for the months of October November and Uecember 191v and else the The earning and expense figures called for beloe for the same esriod statement for the nine months ending eepteeber 3e 1916 shown ea pages 54 and 595 of the November bulletin will illustrate what we have in mind C DERACRESERVE BANK OF NEW YORK 2 et eaoh bank send thin representaLlve also the following figures a Molv hly average capital paid in including Sundays and holidays b Service cearget received c Service charges paid Let each bank submit a statement of the total amount of dividends aceraed but not paid to the clese of business December Let the representative of the committee prepare a statement for each bank shoeing the total of its requirements for all oharges ineluding Current exeenses as sheen on 287b Cost of Yederal reserve notes issued by bank including expressage insurance etc 0 isoellaneuus charges account Federal reserve notes d Cost of Federal reserve bank notes issued incite ling taxes e Amortization charges 1 Federal reserve notes 2 All other organizatiun expenses 1 furniture and equipment f Depreciation of g Amount required to meet current dividends of average capital paid in one half Of 14 h A fixed proportkon for all banks say 1 12 of the necumulated dividends unpaid to the close of busi ness December These requirements are to be added together and compared with the cur rent earnings fer eech bank for the same period This 111 give the excees or defloiency in earnings for each bank Eann bank tut shoeing a deficiencyjn ref rent earnings for all reqairements as above outlined should receive such proper tion of the inVestments to be distributed as its deficiency beaes to the total A RESERVE BANK 61 NEW YORK defiaienay for all banks not showing earning equal to or in excess of all requirements This plan seals to meet the requirement that it be simple and be as equable a distribution as oe aan have without getting into tuo minute aalaulattons Very truly yours Searetary SW J04 End FEDERAL RESERVE BANK OF RICHMOND FIFTH DISTRICT DI RECTORS OFFICERS GEORGE J SEAY GOVERNOR CHAS A PEPLE V GE GOVERNOR GEORGE H KEESEE cAsHIER JAMES A MONCURE CALDWELL HARDY DEPUTY FEDERAL RESERVE AGENT CHAIRMAN AND FEDERAL RESERVE AGENT EDWIN MANN EH EFIE o W VA H B WILCOX BALTIMORE MD JAS F OYSTER WASHINGTON DC UTO os N G JOHN F R H MOND EDMUN JAN1 0 Si F H GOUVERNEUR wtLmINGYON N c D R COKER HARTsvtu c s C 1911December 22nd 1916 Ley dear Strong I am writing to send you my very best wishes for a happy Christmas and for complete restoration to your former vigor in the Mew Year We enjoyed our last conference in Washington but I know that all of us missed your presence I am venturing to send you two or three articles which I have recently had to write which probably you may find of interest at all new but apparently all of them are still The subjects are not under discussion as I found at our recent conference and each one was written at somebody s request I know that you are very deeply interested by the turn which our foreign relations has taken in the last few days More serious blunders have been committed as it seems to me and their effects were certainly disastrous in one respect at least that is upon the markets I am wondering how you felt about the recent announcement of the Board with respect to the purchase of foreign securities While feeling the necessity for banks maintaining a liquid condition my own feelings and opinions did not coincide with the Board s utterances I trust that you have continued to improve right along which is what I heard when I last had the opportunity to inquire 4 With my best regards Yours sincerely Mr Benj Strong The http fraser stlouisfed org articles Federal Reserve Bank of St Louis referred to are being sent under separate Ver IIHUHUU HUUU11U114 11HU HUHUH UU It 11 II ill II I I if I 11 II 11 if l III o tilt 11 11 II II 11 11 II if I I II 11 II II If It 11 II A MEMORANDUM II If I ON SUGGESTED PLAN FIXING A NEW III II II II 11 I lit lilt RATIO OF RESERVES TO BE KEPT IN FEDERAL 11 If RESERVE BANKS AND MAKING NO RE 11 II QUEIEMENT AS TO VAULT RESERVES BY II It MU tilt It 11 11 I 11 il I II 1 11 GEORGE J SEAY fit RH IfU U IF It HU UU M1 11H0i UHUU usluitlIsM u uttutistummulluntluiluilltulv 11 39M u u 1 TABLE 1 Showing different kinds of cash held by member banks on September Showing ratio of cash hold to total net deposits It 3 Showing of reserves to total net deposits equired under Act when in full effect Comparison of vault reserves carried under old law and under Federal Reserve Act Showing legal reserve required under full operation of Act in comparison with reserves carried by country banks of 5th District showing 5 of total net deposits required to be kept in Federal Reserve Banks under suggested plan compared with Act 7 Comparison of reserves likely to be required for operation under suggested plan with reserves required under Act The average lawful cash reserve carried in vaults by the national banks of the country for a period of about fiv years preceding the establishment of the Federal Reserve System that is from February 5th 1909 to August 9th was as follows By Central Reserve Banks Reserve City Banks Country Banks The central Reserve and Reserve City banks carried little more than was reeuired to be carried by law the small excess probably being the result of effort to insure average maintenance of requirements The amount required to be kept by Reserve City Banks Viz 12 1 2 percent was adequate and doubtless more than adequate for purposes of daily operations Since the country banks which were required to keep a lawful reserve of only 6 percent maintained an average of 7 1 2 percent one of two conclusions may be drawn conditions First that 6 percent was not adequate for operation under old second that in order to insure the maintenance of the 6 percent required it was necessary to make provision which resulted in keeping on hand an average of 7 1 2 percent In this connection it is enlighting to consider that the commercial state banks of the country large and small had on hand Jun 30th 1914 acco ding to statemmts furnished the Comptroller cash of all kinds amounting to 8 2 percent of their deposits which happens to be the exact percentage carried by all national banks on September 12th 1916 as will be shown hereafter It is only since the establishmer of Federal Reserve Banks that we have come into possession of information tending to show the amount of cash on hand which the banks find it necessary or advisable to carry Following is a statement of the legal reserve held in vaults by the three classes of national banks on the dates specified of Total Net Deposits 0 Nova Dec June Sept Central Reserve Banks Reserve City Banks Country Banks This shows a gradually declining ratio and while in each case the amount carried is in excess of the amount required to be carried under the Act prior to the amendment relating to vault reserves it is so little in excess of the amount required except in the case of Central Reserve banks that no definite conclusions can yet be drawn as to the amount necessary to be maintained for operation and we shall have to wait for further information and experience to determine approximately the minimum required Following is a comparison of the percentages of reserve carried with that required to be carried of Total Net Deposits Amount required in Vault Amount carried in Vault Sept Central Reserve Banks Reserve City Banks Country Banks The foregoing statement gives only the legal reserve carried which does not include national bank notes and other till money The amount of national bank notes carried on September 12th probably may be taken as an average cf as as follows of Total Net Deposits Central Reserve Banks 28 Reserve City Bank 93 Country Banks 91 191 6 which I Adding this cash to the lawful money reserve carried will give the total cash or till money on hand as follows Central Reserve Banks 12 30 Reserve City Banks 7160 Country Banks 6 28 Average 8 20 This average amount of cash carried by all national banks is the exact equivalent of the amount of cash of all kinds carried by commercial state banks on June 30th 1914 as previously mentioned It may be reasonably assumed that banks now feel the assurance of being able to obtain currency qu ickly and with certainty from Federal Reserve Banks and that therefore they are willing and able to operate with lower vault reserves than under former conditions If tnen it can be fairly assumed that the amount of cash carried in vatilts in the case of each class of banks as shown in the foregoing statementf is close to the minimum needed for daily operations then it may be necessary to consider whether the reserves required to be carried in Federal Reserve Banks under the proposed plan will not increase the total amount of resources to be maintained for operating purposes and therefore add a burden to the banks rather than give them the relief for which many of them are now asking Following is a statement of the reserves which the suggested plan would require to be maintained in Federal Reserve Banks in comparison with the reserves required to be carried with Reserve Banks under the present Act RESERVES REQUIRED IN FEDERAL RESERVE BANYS LNJER SU IGES ED PLAN WEICh WOULD MAKE NO REQUIREMENT AS TO RESERVES war Central Reserve Banks 135 Demand Deposits Time 12 74 against 6 88 under present Act Reserve City Banks 105 Demand Deposits 3 Time 9 33 against 5 52 under present Act against 4 12 under present Act Country Banks 77 Demand Deposits 3 Time If we add to the amount of reserve required under the plan as set down in the foregoing the amount necessary to be carried as till money assuming amount that the amount heretofcre specified is the approximate required the follow ing would be the result NEW PLAN In F R Banks F R Act Till Money Total Reserve City Banks Country Banks Central Reserve Banks It is reasonably certain that Central Re3erve Banks can operate with a much smaller cash supply than above specified The ability to obtain currency from Federal Reserve Banks as needed also the ability to obtain gold for excess balances and for the proceeds cf rediscounts are important factors in this case Whether Central Reserve Banks will be satisfied to keep on htlnd only the cash which may be needed is another matter The effect of the prcpOsed plan upon t17 e banks of 0 he country wov7 o vary widely not only according to locality but according to the character of business done by each bank It would perhaps fall heavily upon country banks remote from a Reserve Bank which find i t necessary to maintain larger vault reserves because of the inability to replenish frequently and with dispatch At the beginning it is probable that banks which have been maintaining a large vault reserve will not be willing to assume that they could do with much less and only experience will satisfy them Table No 5 in that particular which aecompanies this memorandum gives a comparative state ment of the vault reserves maintained by the country banks of the 5th District The situation with respect to these country banks is probably typical of the smaller country banks generally It is the cash reserve carried by the larger country banks so called which brings up the average and it is therefore to be taken into account that in the case of such banks which are numerous the cash required will be considerably in excess of the average here given for country banks generally Those banks which carry the accounts of other banks will doubtless feel it necessary to carry a reserve considerably abo ffe the average CONCLUSION The indications are that the proposed plan would result in compelling banks generally and a large number of banks in particular to carry a larger proportion of unproductive resources than is now required under the Federal Reserve Act Geo J Seay TABLE 1 1 DIFFERENT KINDS OF GASH HELD BY MEMBER BANKS SEPTEMBER 12TH 1916 In thousands National Bank Notes Central Reserve City Banks o Federal Reserve Notes Legals Gold r Reserve City Banks Country Banks TABLE 2 RATIO OF CASH HELD TO TEELNLT DEpOSITS Total Net Lawful Money g of Other Moneys Deposits In Vaults Deposits g of Total Cash in Vaults Central Reserve City 2 711f Banks Reserve City Banks Country Banks 8 20 TABLE 3 PERCENTAGE OF RESERVE TO TOTAL NET DEPOSITS REQUIRED UNDER ACTS VEEN IN FULL EFFECT In Federal Reserve Banks 4 Central Reserve Cities 18 5 Reserve Cities Country Banks In Vault Optional Total TABLE 4 COMPARISON OF VAULT RESERVES CARRIED UNDER OLD LAW AND UNDER FEDERAL RESERVE ACT of Total Not Deposits Average from Feb 5 1909 to Aug Nov Central Reserve Banks Reserve City Banks June 5 75 Country Banks Sept 12 19J Dec TABLE 5 LEGAL RESERVE REQUIRED UNDER FULL OPERATION OF THE FEDERAL RESERVE ACT Based upon condition of Country Banks of 5th District as shovin in Comptrollers report of March 7 1916 compared with Reserve carried on March and the average reserve carried from February 5 1909 to August Due from Reserve Banks Cash in Vault Per Cent of Per Cent Of Net Deposits Net Deposits Optional 1 Maryland Reserve required Reserve carried March 7 1916 Average reserve carried Virginia Reserve required Reserve carried March Average reserve carried 1909 West Virginia ReServe required Reserve carried March 7 1916 Average reserve carried 1909 North Carolina Reserve required Reserve carried March 7 1916 Average reserve carried 1909 South Carolina Reserve required Reserve carried March 7 1916 Average reserve carried 1909 z I Ca C TABLE 6 RESERVES REQUIRED IN FEDERAL RESERVE BANKS UNDER SUGGESTED PLAN THTCH WOULD MAKE NO REQUIREMENT AS TO VAULT RESERVES of Total Net Deposits Central Reserve Banks 13 Demand Deposits 3 Time against under present Act Reserve City Banks 10 Demand Deposits It 3 Time 9 33 against 5 52 under present Act Country Banks 7 3 Demand Deposits Time 5 80 against 4 12 under present Act TABLE 7 COMPARISON OF RESERVES LIKELYTO BE REQUIRED FOR OPERATION UNDER SUGGESTED PLAN WITH RESERVES REQUIRED UNDER PRESENT ACT WHEN IN FULL OPERATION UNDER SUGGESTED PLAN In Federal Reserve Banks City Central Reserve Banks In Vaults Based on amount held Sept Reserve City Banks C ountry Banks Total UNDER PRESENT ACT In Ieederal Res3rve Banks Optional Reserve City Banks Country Banks C antral Reserve City Banks In Vaults Total Denver Colorado January Dear Governor Seay Please pardon this tardy acknowledgment of your kind letter of December 22nd Which was occasioned by mu Denver and re turning to quite an accumulation of wo I have read the enclosure with t interest subject of parring Federal Reserve Banks I am sorry not at all either as to the pl feat one on the o agree with your argument If that subject can be lef collection plan is more fully developed we can ransfers on a sound basis that will accompli bout in mind without the Reserve Banks encounte n unwise extension of credit on uncollected checks Your argument a reserves in a separate memo randum is very imeres that must be ca fixed and hope they may Don t a foreign relati are other features of the proposed lly considered before the percentages are are certainly in the right direction e effected me to comment on the various developments in our about Which just now I am feeling rather distrubed 1 an certainly continuing to improve and look forward to the date of my return sometime this year My gamest thanks to you good friend for your Christmas and New Year s greetings Which I very heartily reciprocate Very sincerely yours George J Seay Esq Va Richmond Lcrci Yittr 0 March PERSONAL AND CONFIDENTIAL My dear Governor Seay For some time I have been interested with some friends in a study of some of the problems of our national financial system and particularly to the possibili ties of a reform movement which might result in the establishment of a scientific plan for a Federal bigia The need for this has been made apparent to me during the past Iwo years and as a result of contact with the financial machinery in washinF7ton Some of my friends believe the time is now opportune for a general attempt to interest the people of the country in national financial reform The campaign for savings thrift and sensible spending incident to the flo tation of Government loans has put many of our people in a receptive mood for further suggestions in these matters The national debt must be reduced and can only be reduced if both individuals and the Government practise sensible spending It is particularly true with the Government but cannot be made possible until scientific machinery is installed to accomplish it Students of this subject seem to be in general agreement that a scientific budget system is the only solution To persuade our people that such a system sheuld be installed a nonpartisan organization should be built up and a wise and sane cam paign of publicity inaugurated It is a plan of that sort in which some of my frienos are interested with a view to activity after the next loan is placed In the meantime steps must be taken to prepare the publicity and the personnel of the organization must be developed in advance It is of coarse out of the question to utilize the Liberty lean organizaons as such for an enterprise of proper for me to ask you this character if in your experience other organizations in connection with the war It does not however seem im with the Liberty Loan War Savings or you have come in contact with individuals in your district who would be likely to be interested in this movement and who would f2 March be qualified for service in such an organization and who would do so as a matter of public duty What is first needed is a representative in every State competent to take charge of the movement and direct in to enable him to become a leader of the it the State He should have qualifications State movement some ability as an organizer should be public spirited able to gragp the subject and willing to study it and locally as should be regarded without political prejudice or purpose and have the confidence in general of the people of the State In addition to state directors similar organizers must be appointed in the various counties and principal cities I shall be greatly indebted to you if you can let me have suggestions and names of men in your district for this work without however mentioning the matter to them You may know them well now to make definite recommendations not only because you came in contact with them in Liberty Loan matters but other public spirited activities with which you are acquainted or connected This is a matter in Which I have a strong personal interest and will be grateful have an for your assistance opportunity At our meeting in Washington on the 20th I hope to to refer to this matter more specifically Sincerely yours Governor Georg 3 Seay Esq Governor Federal Richmond Va BS NB Reserve Bank of Richmond FEDERAL RESERVE RAM C we NEw Vox r Department Interested Prepared by J t Copy Translation TELEGRAM NA Checked by Code used 0 K TEL D 1 FEDERAL RESERVE BANK OF NEW YORK PRIVATE WIREINCOMING 25bdsj Richmond Va Dec 24 1135a Strong NewYoi Most cordial greetings and good wishes from us all to all of you Geo J Seay rrommealWoor Governor 1215p P C it e COPY September CONFIIIENTIAI George J Seay Esq Governor Federal Reserve Bank of Richmond Richmond Va Dear Governor Seay There are two matters related to the foreign operations of the Federal Reserve System about which I wish to advise you as follows liA V OF ENGLAND STERLING GOLD ACCOUNT We have decided to bring to this country the gold earmarked with the Bank of England for account of the Federal Reserve Banks that this quastian was discussed at the governors conference last April and it was left to our discretion as to whether this gold should remain in London or be brought back After giving the matter careful consideration and discussing it with our directors and the Federal Reserve Board we have decided to bring the gold to New York As a matter of courtesy we cabled the Bank of England to ascertain whether any object would be served by our leaving a portion of the gold with them and they replied that they saw none from their position The Bank of England has agreed to arrange tandhandle the shipment Of the gold settling freight and other Charges Insurance is being effected by us here in New York As this operation progress there will undoubtedly be further details to report to you and I shall see that you are fully informed No statement has yet been made to the press and when we decide to do so which will probably be shortly before actual shipments begin we shall be careful to explain the nature of the transaction so that there will be no misunderstanding as to its effect upon the reserves of the Federal Reserve Banks BANK OF FANCE EARVABI7D Gqp An inquiry has just been received from the Bank of France regarding our willingness to accept a deposit of earalarked gold with them We understand that the French Government plans to meet its share of the Anglo French bonds maturing October in approximately the following manner has already been provided from the new issue of 8 twenty five year bonds dated September through gold imports or accumulations exchange in other ways of dollar We are informed that the French Government proposes to start gold You wi 2p shipments immediately but in order to meet any possible contingency which may arise prior to October 15 the Bank of Prance has inquired whether we would accept a deposit of gold earmarked with them which we could withdraw at our option and at their expense The figure mentioned was Our directors and I felt that under existing circumstances we should accede to their request and that to refuse would create a very unfortunate Some of our directors thought that even if the amount should run situation as high as we should indicate our willingness to permit them to earmark that amount for us and I share their views The Board has also advised us that they see no objection to the transaction and that they will agree if reoxested to permit this gold to be counted as part of the lawful reserve of the Federal Reserve Bank pending its Shipment to the United States although it is no longer the policy of the Board to permit gold with foreign agencies to be counted as reserve indefinitely The Board adds that it is understood that any other Federal Reserve Bank desiring to do so may assume its pro rata share of this deposit I am giving you this outline of the transaction to ascertain whether in case the gold is earmarked with the Bank of France up to or possibly even you would care to take a pro rata share such as In this connection it should be borne you had in the German gold account in mind that shipments of the gold with the Bank of England will begin shortly and in case the Bank of France desires us to earmark or our gold with foreign agencies will be considerably decreased over its present total With kind regards I am Very truly yours J H CASE Acting Governor ar September 14 1 9P1 Dear Governor Seay You will rece that obout two years aze we had eome correspondence in regard to the work of the National Budget Cemmittee In oart st leeet etesage of the budget legislation by the Congress ens due to the work conducted by that comiAittee ticeo that the bosie of the budget system bits been rido ted by Congress our organization iF endeaVoring to cryetellize oablic sentiment for the support of the 2roejm of governueut eoonomy and thereby to insure permanent suceese for the oew zationel budget systee are soaking Al extend tole or by celeeting eo fer as eossible o nkere to ccep oiv Alai reel ships in various of the more important cities simply to carry on work which will be lsid out for them by the national committeo The eccpe of the or in deecribed in tha eociosed memorandum Cen you auggest representative wen preferably beneers IOW it be willing to accept boob appointmente in the ities of Baltimore Norfolk Bichmond and Weehington At the present tiee I shall only as you to suggest names but later on possibly you would be willing to co unicate with thee directly and further our object of having them accept these apiosintments If for aay reason you think it unwise to meke these suggentione will you not writs me quite frankly and if you are willing to do OD give me your reasotle With best regards and thanking you very cordially I am Yours very truly George J Seay Esq Governor Federal Aeservo Bank of Richmond Richmond Va 38 11k 6 BANKkei FEDERAL RESERVE OF RICHMOND 44 41k June A Dear Governor Strong I have just received your letter of the 21st relating to the policy of requesting the Treasury Department to reimburse us for fiscal agency expenses beginning July in accordance with the understanding arrived at at the last ConEnclosed is confirmation of the telegraphference of Governors The position taken by our directors ic repIT which you requested could not be reversed except in a formal way but lam not inclined to think that they would be willing to reverse it In the beginning it was assumed as a matter of course that the Department would pay the expenses incurred in the performance of fiscal agency work which the Reserve Banks were required to do and but for the huge earnings of the banks made during war time the question probably would not have arisen In recent testimony before Congress representatives of the Board have emphasized the fact that Federal Reserve Banks are privately owned institutions and not governmental banks and without attempting to argue the legal aspect of the right of the Treasury to require a Federal Reserve Bank to perform fiscal agency work at its own expense it seems to me that it is of prime importance to adhcre to the principle and establish if possible the public understanding that Federal Reserve Banks are not governmental institutions in essence whatever powers may have been conferred upon them by the Government and whatever duties they may perform for the Government To assume as a matter of course or to continue the practice of absorbing the expense of governmental work as fiscal agents would tend to bring about the contrary view and perhaps the feeling on the part of governmental officials and others that Federal Reserve Banks are more under the direction of governmental officials and probably of Congress than they were intended to be and are under the Act The term Fiscal Agent is broad enough as it stands and perhaps might legally construed cover anything and everything that the proper officials of Government might feel disposed to require Federal Reserve Banks to do I am not overlooking the fact that subtreasury functions have been transferred to Federal Reserve Banks for performance at their own expense but in the performance of these functions their autonomy is not brought into question and the duties are performed only under general regulations relating to the currency upon which the Treasury Department has acted for many years The present head of the Treasury Department has evidenced a readiness to assume that Federal Reserve Banks may and should be reimbursed Governor Strong Pg for expenses incurred exclusively in the performance of fiscal agency work I did not understard that the Department would specifically ask Congress for an appropriation to provide for the expenses of performing this work during the fiscal year beginning July 1 but that But notwithstanding such it would be done under existing authority may be the case I nevertheless believe that we should seek to be reimbursed at least for the clerical labor of performing fiscal agency duties which is practically all that we ask for You allude to the adoption of a uniform investment policy by the Federal Reserve Banks which if carried out will produce revenue sufThis is the policy to ficient to meet expenses and pay dividends which we were driven by the lack of income and it is one with respect to which so far as it involves investment in Government securities the Treasury acquiesced apparently with reluctance under present conditions If we cannot count upon being reimbursed for fiscal agency expenses it will require a much larger volume of investment than would This I think is not good policy and we should otherwise be the case not be driven to it I have read the memorandum which governed or influenced your conclusions that it would not be wise to raise the question of reimbursement for fiscal agency expenses Nevertheless for the reasons given in the foregoing I believe we should at this time when apparently the Treasury is disposed to favor or acquiesce in reimbursement take the position that we should be reimbursed and ask for reimbursement and I am inclined to the opinion that if we do not take such action now when the Department is disposed to meet us we may not hereafter be able to obtain reimbursement and continued acquiescence in the payment of such expenses by Federal Reserve Banks will establish a precedent from which we may not be able to break away Very truly yours GJS CCP Benj Strong Esq Governor Federal Reserve Bank of New York New York City eft for 4 trOttEGA 09 C July Geo J Seay Esq Governor Federal Reserve Bank of Richmond Richmond Va Dear Governor Stag At the recent meeting of the Advisory Committee of Governors in Washington it was suggested that we send to each Federal Reserve Bank complete information regarding the investments made for fbreloa banks in participate which the several Federal reserve banks The most practicable wag of do ing this seems to be to give you a state ment as of June 30 showing in detail the bills and certificates then held for foreip account With this as a starting point we think it best to send you currently a copy of the schedule which is preAred whenever bills or cart ificates are purchased for foreign Da 1 ES This will give you complete information on all investments in which you participate and enable you to keep such records as you may desire Furthermore we snail continue to sand you at the beginning of each month a condensed statement showing in totals the free balances bills and certificates held will enaule you to check for each foreien bank which the amounts of your participation as wired you on the first of the month i trust that this arrangement will be satisfactory to you but if you should desire any additional information or would like to suggest any change in the Procedure outlined please do not hesitate to say so well as copies of the schedules of The statements of June 30 are enclosed as Dills bought on July 2 and 3 subsequent purchases will be mailed to you in the ordinary course Very truly yours J H CA3E En c Deput y Governor Schedules covering COPY letterent to governor of each Federtl rererve benk January mr George Seay Governor iederal Reserve Dank of Richmond Richmond Va Dear Governor Seay In view of the Oontiaued strength in vecemalr and much greater strength in January of the Government security market irclueing ihort term certificates and notes with higher quotations for all isues it has not been possible to purchase more than mod rate amounts fee the epecial Investment Aceount of Jae reserve banks Purceeees foe 4 1e ystem so far tetal about i35 0D0 000 In order more nearly to meet 116 14ket conditions the Caenittee changed slightly the eree limite on january e on some of the issues which are being purchaeed for the apecial Investment Accouat of Which you were advised in a telegram sent by the secretary of the Committee You will note that these changes only affect the issues of September 1924 to June 1925 inclueive Aaile the securities acquired tioeld dhow a profit if they were to be sold now nevertheless the Committee is acting on the belief that kedeeal reeeeve banke wish in this matter wholly to subordinate profits to the successful prosecution of the policy established that the reseeve beaks should acquire a portfolio of certificates and notes us Thie matter was discussed at to day s meeting of the Upon Market Investment Commitconditionpermit tee and it was the sense of the meeting that purchases of short term is with maturities up to June 1925 should continue to be made in a mod rate way as canoitioae in the market permit at the limits established by the Committee on January e 19a4 At to day s meeting the question of making purchases of later maturities was also discussed and it wt decided that in addition to acouiring eovernment issues maturing between now and June 19 5 that further purchases might be made of reasu y notes due December up to an aleount not to exceed in the aggregate between now and the next meeting ot the aamnittee at a price not to exceed 4 30 The present maturities and limits are as follows Matutits Price Limit March 1924 June Sept March 1925 June Dec 4 3O Very truly yours Benj Strong Chairman Open Market Investment Committee for the Federal Aeseeve System